Apple Music is one of the biggest music streaming services out there to not feature a free ad-supported tier. Apple instead offers users a lengthy 3-month trial period after which they need to shell out $9.99/month. If you thought that Apple could eventually launch a free tier of Apple Music like Spotify, well that’s not going to happen.
Elena Segal, Apple’s senior director of music publishing, while speaking to a number of UK MPs at a Digital, Culture, Media, and Sport Committee (DCMS) said that Apple has done more than any other platform to ensure money flow to artists and that the company does not intend to offer a free tier of its music subscription service.
Streaming saved music from piracy 11 years ago, how long do you expect musicians to pay for that? Asks @julianknight15
Elena @AppleMusic "we're not asking anyone to be grateful … we have gone further than anyone to ensure money flow … we want there to be a healthy ecosystem."
— Digital, Culture, Media and Sport Committee (@CommonsDCMS) February 23, 2021
Apple was also questioned on running Apple Music as a loss-making service in a bid to sell more iPhones and whether it would switch to a different licensing model. On this, Segal said that doing so would “dramatically affect the economics” of running Apple Music. Additionally, the company wants to create a healthy ecosystem that’s sustainable in the long term. When questioned about finances, Segal said that running Apple Music is a “narrow margin business” especially since the company pays artists more than others.
When questioned about YouTube as a competitor to Apple Music, Segal said it is challenging to compete at an “un-level playing field” referring to how YouTube does not always have licenses to all the music they host. She also noted how that even when they do have the required licenses, their royalties are different and lower because of their business model.
As I said earlier, it’s challenging to compete with free. It’s always been challenging, whether it’s legitimate or illegitimate. And it’s challenging to compete on an un-level playing field.”
When Apple Music first launched, there were a lot of doubts about Apple’s approach of not going with a free ad-supported ad tier. However, a few years down the line, Apple’s strategy has paid off as the streaming service has become a strong competitor to Spotify while also paying music artists the highest amount of royalties.[Source UK Parliament, Via MusicWeek]